An economy awash in oil

Marion King Hubbert’s famous theory of “peak oil” has gained a great deal of traction in the scientific literature of various fields. Want to read up on peak oil and urban planning? Check. Peak oil and tourism? No problem, you’re not the first. Peak oil and public health? Where to even begin? There have been articles on the peak oil phenomenon in publications such as the International Journal of Child Rights; Behaviour and Social Issues; and Physica: Statistical Mechanics and Its Applications.

Curiously, however, there is one field whose literature is a tad light on serious discussions of peak oil: economics.

I’ve also read of theories that the Earth replenishes oil fields. Possibly by an upwelling of deeper sources, or that the Earth actually is creating a resupply. Then there are the far out-there theories that the Earth was bombarded by oil from space long ago, and there is still plenty of it deep below the surface (I did say it’s a far out-there theory).

In any case, I really think we don’t have to worry within our lifetimes of running out of oil. Screw solar and wind as a realistic alternative, not in our lifetime.

Although I’m not qualified...scientifically...to have an educated opinion about it, I really do suspect oil is abiogenic, and NOT a fossil fuel.

This is the minority theory of geologists that oil is NOT a product of rotting dinosaurs (and plants and plankton and other organic material from millions of years ago), rather it is a natural byproduct of molten magma itself, deep beneath the crust, that happens to percolate up into the crust into certain kinds of rock formations.

If this is the case—than there is basically an ENDLESS supply of oil...in COUNTLESS locations around the globe—if we only use our technology to find it and drill (deep enough) for it....

Russian scientists believe this—and have been spectacularly successful in finding oil and gas there, within the last 30 years or so.

IF if abiogenic petroleum is true....it will TOTALLY change world politics and culture, COMPLETELY.

We can use the thorium extracted from coal supplies to power Thorium Molten Salt nuclear reactors. Some of the electricity generated can be used to squash the remaining coal with the Fischer-Tropsch process, perfected by the Germans in WWII to make ersatz petroleum product.

http://en.wikipedia.org/wiki/Molten_salt_reactor

http://en.wikipedia.org/wiki/Fischer-Tropsch_process

So, there is no “peak oil”.

“The Green River Formation--an assemblage of over 1,000 feet of sedimentary rocks that lie beneath parts of Colorado, Utah, and Wyoming--contains the world's largest deposits of oil shale,”Anu K. Mittal, the GAO’s director of natural resources and environment said in written testimony submitted to the House Science Subcommittee on Energy and Environment.

“USGS estimates that the Green River Formation contains about 3 trillion barrels of oil, and about half of this may be recoverable, depending on available technology and economic conditions,” Mittal testified.

“The Rand Corporation, a nonprofit research organization, estimates that 30 to 60 percent of the oil shale in the Green River Formation can be recovered,” Mittal told the subcommittee. “At the midpoint of this estimate, almost half of the 3 trillion barrels of oil would be recoverable. This is an amount about equal to the entire world's proven oil reserves.”

Despite Ms. Mittal's cautionary comments, the aggressive recovery of these reserves could do more than simply provide the economy with large amounts of cheap oil and stimulate the oil and gas industry. Because this oil is largely on federal lands, an enormous amount of federal revenue could be generated through lease options and royalty payments without raising tax rates at all.

How much? The standard royalty payment in the oil and gas business is “one-eighth of production free and clear of costs” or 12.5 percent of the value of the oil extracted. Assuming that the 3-trillion barrel figure is accurate and that the price of oil remains in the neighborhood of $100 per barrel, then the federal non-tax revenue from royalties alone could be as high as $37.5 trillion. However, that figure is no doubt an overestimate of revenue. As more oil is extracted, the price of oil will drop, and hence it will not be economically feasible to recover more of the oil at that point.

But even if only 30 percent of those royalty revenues flowed into the U.S. Treasury, that would be enough to pay off the entire national debt without raising tax rates or cutting federal spending. Moreover, state taxes on oil and gas produced would enable state governments to keep tax rates low without affecting government operations.

The high-paying oil field jobs produced would also create more taxable income not only among those directly working in the oil industry but also in the service businesses of those states in which the oil workers lived. The oil-field workers would also pay more federal income taxes as their incomes rose, and thus the need for federal programs to assist the poor would decline.

Thank you for that information. I’m reminded of how Hitler got Germany out of the Depression - by utilizing natural resources and putting people to work in industry. Granted, it was natural resources of occupied countries and slave labor, but the principle is the same.

Time to invade those federal lands and overthrow the EPA. Not to create an environmental wasteland of beautiful Wyoming (my favorite state), but it would be nice to be able to doze a temporary dirt road through some sage-brush without a two-year wait for an Environmental Impact Statement.

And with unemployment the way it is - we won’t need the slave labor.

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